First Horizon Corporation · NYSE:FHN
First Horizon — Earnings Presentation (October 2024)
27 slides from First Horizon's earnings presentation, October 2024
Slide 1: Q4 Economic Update October 2024
Q4 Economic Update October 2024 1
Slide 2: Moderator: J. Scott McCleneghen
MODERATOR J. Scott McCleneghen EVP, SE Florida PRO CRE First Horizon E C O N O M I C U P D A T E | October 2024 2
Slide 3: Presenter: Sophia Kearney-Lederman
PRESENTER Sophia Kearney-Lederman Senior Economist FHN Financial E C O N O M I C U P D A T E | October 2024
Slide 4: Contrary to the 50bp first cut, Fed doesn't expect to ease rapidly
Contrary to the 50bp first cut, Fed doesn’t expect to ease rapidly October 24, 2024 Sophia Kearney-Lederman
Slide 5: Bigger cut to start = commitment to not get behind
Bigger cut to start = commitment to not get behind Federal Funds Target Rate 6.0% Upper bound 5.5% Today, the Federal Open Market Committee decided to reduce the degree of 5.0% policy restraint by lowering our policy interest rate by 1/2 percentage point. This decision reflects our growing confidenc
Slide 6: GDP looks stronger in Q3 than in first half
GDP looks stronger in Q3 than in first half Atlanta Fed GDPNow: Q3-24 Retail Sales (Sept) 3.4% 4.0% Employment (Sept) 3.3% ISM Non-Manuf (Sept) 3.1% 3.5% Retail Sales (Aug) Initial 3.0% 2.8% Personal Income & Spending (Aug) 2.5% 3.0% 2.5% ISM Manuf. (Sept) 2.5% 2.0% Housing Starts (Jul) 2.0% 1.5% 26
Slide 7: Widening gap in sentiment by income bracket
Widening gap in sentiment by income bracket University of Michigan Consumer Sentiment by Income Bracket 110 Top 33% Middle 33% 100 Bottom 33% 90 80 70 60 50 40 2019 2020 2021 2022 2023 2024 Source: University of Michigan, Bloomberg, FHN Financial 7
Slide 8: Housing market is still subdued
Housing market is still subdued New and Existing Home Sales New Privately Owned Units Under Construction 1200k 6.5m New Home Sales (left) 1100k 1 Unit 1000k 6.0m Existing Home Sales (right) 1000k 5 or more units 5.5m 800k 900k 5.0m 600k 800k 4.5m 700k 400k 4.0m 3.5m 600k 200k 3.0m 500k 0k 2018 2019
Slide 9: Housing affordability is very low
Housing affordability is very low Zillow Home Value and Rent Price Housing Affordability Index $2,100 $375k 200 190 $2,000 $350k 180 +46% 170 $1,900 +33% $325k 160 $1,800 150 $300k 140 $1,700 130 $275k $1,600 120 $250k 110 $1,500 100 Zillow Rental Price Index (left) $225k 90 $1,400 80 Zillow Home Va
Slide 10: Consumption hums along
Consumption hums along Goods Consumption Growth 10.0% 7.5% 5.0% 2.5% 0.0% Nominal, Yr/Yr% -2.5% Real, Yr/Yr% -5.0% 2017 2018 2019 2020 2021 2022 2023 2024 Services Consumption Growth 10.0% Nominal, Yr/Yr% Real, Yr/Yr% 8.0% 6.0% 4.0% 2.0% 0.0% 2017 2018 2019 2020 2021 2022 2023 2024 Source: Bureau of
Slide 11: Positive real wage growth
Positive real wage growth Average Hourly Earnings Growth 9.0% Yr/Yr% 8.0% 7.0% Nominal 6.0% Real 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% 2017 2018 2019 2020 2021 2022 2023 2024 Source: Bureau of Labor Statistics, Macrobond, FHN Financial 11
Slide 12: Inflation generally moving in the right direction
Inflation generally moving in the right direction But September CPI came in a little hotter than expected CPI Mth/Mth% (left) Core CPI 0.6% Yr/Yr% (right) 8.0% 0.6% 8.0% 7.5% 7.5% Mth/Mth% (left) 0.5% 7.0% 0.5% 7.0% 6.5% Yr/Yr% (right) 6.5% 0.4% 6.0% 0.4% 6.0% 5.5% 0.3% 5.0% 5.5% 4.5% 0.3% 5.0% 0.2%
Slide 13: Core CPI and PCE have diverged recently
Core CPI and PCE have diverged recently Core CPI versus Core PCE Mth/Mth % 0.60% 0.55% Core CPI 0.50% Core PCE 0.45% 0.40% 0.35% 0.30% 0.25% 0.20% 0.15% 0.10% 0.05% 0.00% Jul '23 Sep '23 Nov '23 Jan '24 Mar '24 May '24 Jul '24 Sep '24 Source: Bureau of Labor Statistics, Bureau of Economic Analysis,
Slide 14: Still too early to declare inflation victory
Still too early to declare inflation victory PCE Inflation Yr/Yr% 9.0% 8.5% 8.0% Core Goods PCE, Yr/Yr% 7.5% Core Services PCE, Yr/Yr% 7.0% 6.5% Housing PCE, Yr/Yr% 6.0% Supercore PCE, Yr/Yr% 5.5% 2.00% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% 2019 2020 2021 202
Slide 15: Fed easing to avoid further labor market cooling
Fed easing to avoid further labor market cooling 6.5% Openings Rate 8.0% Hires Rate 7.5% 6.0% 7.0% 5.5% 6.5% 5.0% 6.0% 2017-’19 avg 5.5% 4.5% 5.0% 4.0% 4.5% 3.5% 4.0% 3.0% 3.5% 3.0% 2.5% 2017 2018 2019 2020 2021 2022 2023 2024 2017 2018 2019 2020 2021 2022 2023 2024 3.2% Layoffs Rate 1.8% Quits Rate
Slide 16: Hiring picked up in September
Hiring picked up in September July and August were both also revised higher but annual revision likely to be lower Change in Nonfarm Payrolls 600k Government Services Goods Total 500k 3mth Avg 12mth Avg 400k 300k 200k 100k 0k Jan '23 Apr '23 Jul '23 Oct '23 Jan '24 Apr '24 Jul '24 Source: Bureau of
Slide 17: Unemployment rate tumbled in Sept too
Unemployment rate tumbled in Sept too Participation has been the driver of the rise Unemployment Rate 4.50% 4.2% 4.40% Unemployment Rate 4.3% 4.30% 3mth avg 4.20% 4.10% 4.00% 4.1% 3.90% 3.80% 3.70% 3.60% 3.50% 3.7% 3.40% 3.30% 3.4% 3.20% Jan '22 Apr '22 Jul '22 Oct '22 Jan '23 Apr '23 Jul '23 Oct '2
Slide 18: Traders backtrack to FOMC median
Traders backtrack to FOMC median Sept payrolls reset economic outlook for traders Market expectations vs FOMC dot plot median 0 1 2 3 4 # 25bp cuts 5 6 7 8 Mkt expected cuts in '24 Mkt expected cuts in '24 & '25 9 Median dot end '24 Median dot end '25 CPI report FOMC meeting Employment Report 10 11
Slide 19: FOMC acknowledged shifting balance of risks
FOMC acknowledged shifting balance of risks Evolution of median participants' projections: Real GDP Evolution of median participants' projections: Unemployment Rate Dec '23 Mar '24 Jun '24 Sept '24 2.5% Dec '23 Mar '24 Jun '24 Sept '24 5.5% Hundreds Hundreds 5.0% 2.0% 4.5% 2.0% 2.0% 2.0% 4.4% 4.4% 4
Slide 20: Sept dot plot suggests 25bp cuts going forward
Sept dot plot suggests 25bp cuts going forward Current level Median -100bps -50bps 20
Slide 21: Curve returning to normal shape with rate cuts
Curve returning to normal shape with rate cuts The Treasury yield curve 5.75% October 21, 2023 5.50% October 22, 2024 5.25% 5.00% 4.75% 4.50% 4.25% 4.00% 3.75% FF 2M 6M 2Y 5Y 7Y 10Y 15Y 20Y 30Y Source: Bloomberg and FHN Financial 21
Slide 22: Key Takeaways
Key Takeaways ▪ September employment report reframed the economic picture for traders, aligning market expectations with the FOMC median for this year and next. ▪ There are two more FOMC meetings this year: Nov 7 and Dec 18 ▪ Hurricanes Helene and Milton and Boeing strike could complicate data in th
Slide 23: Disclaimer
Although this information has been obtained from sources which we believe to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any secur
Slide 24: Q&A
Q&A J. Scott McCleneghen Sophia Kearney-Lederman EVP, SE Florida PRO CRE Senior Economist First Horizon FHN Financial E C O N O M I C U P D A T E | October 2024
Slide 25: Closing
Closing J. Scott McCleneghen EVP, SE Florida PRO CRE First Horizon E C O N O M I C U P D A T E | October 2024 25
Slide 26: Please reach out to your banker with any questions
Please reach out to your banker with any questions or to set up a meeting with our Economist. A recording of this event will be forwarded next week. Next virtual event: December 19 Market Update: Quarterly Conversations E C O N O M I C U P D A T E | October 2024 26
Slide 27: Thank you.
RY FIRST HORIZON. GY FHN FINANCIAL. Thank you.